Meb Faber’s Ivy 10 Portfolio: Expand And Conquer Yale And Harvard

Meb Faber's Ivy 10 portfolio offers better returns than the Ivy 5 portfolio. It bets on alternatives and has global reach. Is the Ivy 10 right for you?

Meb Faber’s Ivy 10 Portfolio can be built with 9 ETFs. It is exposed to 20% bonds 60% equities. It also has 20% exposure to commodities. It is a medium-risk portfolio.

For the past 10 years, the Meb Faber’s Ivy 10 Portfolio has returned 5.33% with a standard deviation of 13.53%. The dividend yield is 2.55%. The 30-year return is 7.95%. Year to date the Meb Faber’s Ivy 10 Portfolio has returned -4.93%.

What is Meb Faber’s Ivy 10 portfolio?

Meb Faber’s Ivy 10 portfolio is an expansion of the Ivy 5 portfolio. The portfolio attempts to mirror the portfolios of large endowment funds like Yale and Harvard. The portfolio of large endowments has been heavily influenced by David Swensen of Yale. His approach is to diversify into alternative asset classes like natural resources (timber), real estate, and private equity. Meb Faber and Eric W. Richardson’s have looked over the shoulders of David Swensen and other fund managers and have constructed the Ivy Portfolio. They present the asset allocation in their book  The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets.

Asset allocation piechart for Meb Faber’s Ivy 10 Portfolio

meb-faber-ivy-10-portfolio

Here’s Meb talking about value stocks

What is the performance of Meb Faber’s Ivy 10 Portfolio?

Below you can see the historical performance of Meb Faber’s Ivy 10 Portfolio.

NameAsset class countYear to dateReturn in 201910 year returnCAGR since 1989 (%)Risk levelExpense ratio
Meb Faber Ivy 10 Portfolio9-4.9320.085.33%7.9530.23%
From portfoliovisualizer.com

How fo you Meb Faber’s Ivy 10 Portfolio with ETFs?

Below you can see which mutual funds or ETFs you can use to build the portfolio. They are the best-in-class funds and ETFs for this purpose. They are low-cost index funds that best capture the asset class. Read here how we selected the best funds.

Asset allocation for the Ivy 10 portfolio

  • 10.00%  US Large Cap      (VV)
  • 10.00%  US Small Cap      (VIOO)
  • 10.00%  REITs     (VNQ)
  • 10.00%  International Developed Blend      (VEA)
  • 10.00%  Emerging Markets           (VWO)
  • 10.00%  Total US Bond Market    (BND)
  • 20.00%  Commodities     (DBC / GSG)
  • 10.00%  TIPS       (VTIP)
  • 10.00%  International REITs          (VNQI)

How we select the right ETFs

There are a lot of ETFs out there. Most of them can be discarded because:

  • They are too expensive
  • They hold too few assets and are therefore too illiquid
  • They do not meet the criteria for representing the asset class they are supposed to mirror.

We have carefully selected an ETF for each asset class that the portfolios on portfolioeinstein.com use. If you want to read more about our selection process and see what we consider the best ETFs please visit our article What Is The Best ETF?

If you are a European investor you need to buy European ETFs. We list 47 best ETFs in our article What Are The Best ETFs For European Investors? (Here Is 47).

As of 2020 we also track socially responsible investing ESG portfolios. Socially responsible investing (ESG) portfolios prioritize investing that puts an emphasis on environmental, social and corporate governance issues.

You can find the socially responsible investing ESG ETFs in the same article.

Meb Faber and Eric W. Richardson propose using the following ETFs:

Advantages and disadvantages of  the Ivy 10 portfolio

Advantages

  • Simple to understand, 10 funds split equally.
  • Better diversified and more chances to rebalance than the Ivy 5 portfolio. Thereby reducing risk and increasing returns.
  • Global and well diversified
  • Constructed by Meb Faber – a respected financial quant that almost single-handedly has revived market timing.
  • Makes a bet on commodities.
  • You get a portfolio that resembles that of Yale and Harvard. David Swensen of Yale has had astonishing returns using a similar model.

Disadvantages:

  • The bet on commodities may not be desirable.
  • The inclusion of commodities makes the portfolio slightly more expensive due to the higher expense ratio of commodity ETFs.
  • May be too heavy on hard assets such as commodities and REITs (30% in total). They have done great in the past but their performance may not continue.
  • May not be suitable for some as the premise for the endowments holding a similar portfolio is holding the assets “forever”. Private investors do not have forever. Most have between 5-50 years.

Resources

Go here for a rebalance excel worksheet.

Also, be sure to visit the Meb Faber site. It is a wealth of information and inspiration. His podcast is also very good (the first episode is absolutely awesome as he runs down what investing is really about.

Suggestions for your next steps

Finding the correct portfolio is hard. Maintaining your portfolio is also daunting. If you are still in doubt about which portfolio to choose, we suggest you read our article How To Invest Money: 5 Simple Steps That Work For Anyone

If you have already committed to a portfolio – good for you! If you need help maintaining the portfolio you will find our rebalance worksheet useful. Rebalancing your portfolio lowers your risk and may even provide higher returns in the long run.

You can find the rebalance worksheet in our article Here Is The Most Easy To Use Portfolio Rebalance Tool

Related questions

What is the Meb Faber’s Ivy 5 Portfolio?

The Meb Faber’s Ivy 5 Portfolio is the little brother of Meb Faber’s Ivy 10 Portfolio. It consists of just 5 ETFs. You can find it here.

What is the Trinity portfolio?

The trinity portfolio is a mixed strategy portfolio by Meb Faber. It consists of exposure to buy and hold, value stocks, and trend following. You can read about the Trinity portfolio here. It is also available as an ETF under the ticker symbol TRTY.

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